1 December 2011 – Overall, 29% of companies in the Czech Republic experienced economic crime in the past 12 months, according to PwC's 2011 Global Economic Crime Survey. The previous year of the survey conducted in 2009 showed “only” 24% of Czech companies were victims of such activities. As with the other parts of the world, Czech companies have also been increasingly attacked from internet.
Asset misappropriation remains the most common type of economic crime reported in the Czech Republic (75%). For the CEE and world at large, the numbers are 69% and 72%, respectively. Together with cybercrime, asset misappropriation appears to be the main contributor to the overall increase in the percentage of Czech organisations affected by economic crime.
“This is not surprising, given the fact that it is easier to detect compared to other types of economic crimes. However, alarmingly, most organisations in the Czech Republic still think it is unlikely that their organisation will be subject to economic crime in the next 12 months. Given the current development of the world economy, this may well be just a false illusion of safety,” said Michal Kohoutek, Director, Forensic Services, PwC Czech Republic.
Cybercrime, a relatively new trend in the Czech Republic, is already the fourth place in terms of frequency (13%), after accounting fraud and bribery & corruption (21% each). Czech organisations are increasingly aware of the risk of cybercrime. Overall, 98% of Czech respondents stated that their perception of the risk of cybercrime has either increased or remained the same over the last year. 56% of Czech respondents said their organisation does not monitor the use of social media sites, or they are not aware of it.
“This is startling, because these sites can present big security risks if employees abuse them. While social media sites such as Facebook or LinkedIn may not be the real source of cybercrime, they can be used to social-engineer cybercrime more effectively, phishing attacks for instance,“ Filip Volavka, cybercrime expert from PwC Czech Republic, advises.
Fraud continues to be costly: 38% of organisations who suffered economic crime lost over USD 100,000, including 8% suffering a loss of more than USD 5 million as a result of fraud.
“However, the fallout from fraud is not simply the direct cost. Collateral damage may be just as damaging: more than two thirds of Czech organisations highlighted the negative impact on employee morale as the most significant indirect cost of economic crime, “ Jiří Moser, Country Managing Partner, PwC v Czech Republic, stressed.
67% of the economic crimes Czech organisations experienced were carried out by internal fraudsters. This number has increased significantly in comparison to 2009 (50%). Customers (43%) and vendors (29%) were identified as the main perpetrators of external fraud. Czech organisations are not afraid to take swift action against fraud perpetrators, whether internal or external: In the case of internal perpetrators, dismissal was the most frequent action taken in the Czech Republic, in 81% of cases. Similarly, when external fraud is detected, the business relationship was ceased in 71% of cases; this represents a significant increase compared to 2009 (30%) and is well above the CEE (53%) and global (39%) averages.
“While the low level of tolerance to fraudsters is definitely a positive sign, we would recommend that organisations increase their efforts on the prevention front: knowing your employees and your business partners prior to engaging with them is less costly than dealing with the consequences of fraud, „ Michal Kohoutek added.
Note to Editors
About the Survey
The sixth Global Economic Crime Survey was carried out between June 2011 and November 2011. The survey questionnaire had three sections: a section with general profile questions; a section with comparative questions looking at what economic crime organisations had experienced; and a section on this year’s special topic, cybercrime. 3,877 people from 78 countries filled in the online survey. Participants were asked to answer the questions with respect to their organisation and the country in which they are mainly based.
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